by David G. Hawkins
This is the end of the quarter, so it's time to review the quarterly bars chart covering the very long term timeframe - many decades. In my next post in the middle of July, I'll resume looking at shorter timeframes.
The first chart here is the quarterly bars chart back to early 1950, which is as far back as daily data go, log scale. The last time I posted this chart I showed how the RSI (upper pane) did with trend line analysis put on it. This time, I have realized that if the RSI is shown log scale as it is here, the trend lines are even more compelling. Right now, the RSI is approaching the second downward sloping red trend line, as price is slowly working its way up towards the the all-time high of the year 2000. As long as RSI remains below that trend line while price crests, then the chart will have formed a tripple top, and the forecasting implication is for a major downturn in the market over the next few years.
The second chart here expands the time scale with price on a linear scale, showing the very long term market from the late 1980s. Notice that each of these two (and perhaps three) price peaks is followed to its top by a TopFinder - TF1, TF2 and TF3. I fit TF3 to the minor pullback in 2010; but this TF has since been breached to the downside with a low that is not too far above the green S1 curve. So, TF3 may no longer be valid, and no new TF should be fit to the late 2011 low since it is so close to S1. That closeness means this uptrend is no longer strongly accelerated. i.e. this third price rise since the mid 1990s is weaker than the first two, which further supports the view that the market on this very long term timeframe is seriously weakening.